According to VnEconomy, a regional publication in Vietnam, the country's financial authorities will potentially legalise bitcoin and other cryptocurrencies by the end of 2017.
Although officials recognise that other nations have started to impose regulatory frameworks, Vietnam only has the Anti-Money Laundering Act and the country has no formal regulations or legal guidelines for virtual currencies. This means that the process of legalising cryptocurrencies will be no easy task, and much more research must be done to clarify understanding of a digital economy; particularly for business operations.
So, why is Vietnam considering legalising bitcoin and what are the implications of the decision?
Vietnam's chequered history with bitcoin
The process of legalising cryptocurrencies is far from straightforward, and regulators see several risks, such as money laundering, tax evasion and other criminal activities.
Previously, Vietnamese officials have issued strong warnings against the use of bitcoin. In addition, last year, Bloomberg BNA reported that there was a significantly sized pyramid scheme operating within the country, which has led to the call for greater regulation. It is this that appears to be the impetus behind Vietnam's decision to draft legislation on bitcoin, to prevent further issues arising.
Additionally, it also appears as though this wasn't an isolated incident, and Vietnam's Ministry of Public Security's high-tech crime prevention office, Nguyen Thi Thu Hang, has stated that she has seen the number of pyramid schemes using cryptocurrencies increasing, most notably Airbitclub, and Bitkingdom which promise returns of 80 percent annually.
These platforms receive their money through bitcoin, operate under a multi-level model and take money from a later person to pay an earlier person.
However, the Vietnamese government appears to accept that bitcoin also has a number of practical uses as well as reputable business operations. As such, they accept that they must not stifle innovation with strict regulatory policy and must keep this in mind when they begin to draft proposals.
However, there's a feeling in Vietnam at present that, in a country with 2.2 million active electronic wallets at the country, more must be done to open the country up to internet payments and cryptocurrencies, which could yet be the future of payments.
What are the implications of bitcoin adaptation?
The concerns of bitcoin adaptation remain apparent, and the implications of adopting the currency could be wide-ranging. Regulation will have to deal specifically with certain aspects of the currency and allay fears about: money laundering and the creation of financial market chaos.
Due to the fact that bitcoin transactions are conducted on the internet, it's also incredibly difficult for the government to collect taxes. As a result, the government of Vietnam could also lose large sums of money through tax evasion.
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